Answer to Question #229456 in Management for Pabi

Question

After much planning and deliberation, Kabelo and Hendrik decide to base their decision on 

investing in cryotherapy on the net present value of the investment they would have to make in 

order to purchase the cryotherapy equipment for Fitness gym. Their calculations determine that 

the NPV for the cryotherapy equipment is R365 234. This means that Kabelo and Hendrik must 

______________ . 

1 contact a business consultant to assist with better decision-making criteria

2 reject the project and develop a new proposal 

3 accept the project and install the new equipment as soon as possible 

4 delay their decision until more information becomes available

Answer 1

1 contact a business consultant to assist with better decision-making criteria

Basis of the anser

The NPV of the equipment does not entirely show the future cash flows from the investment. Therefore it is rational for them to seek consultancy on the same so as to have a clear picture of the profitability of their investment.